Everything’s Amazing and Nobody’s Happy | Econ Chronicles

Bryan Caplan,

Release Date
May 13, 2014


Free Markets and Capitalism

People tend to think the world is much worse off than it actually is. Bad news gets a lot more attention than good news. Professor Bryan Caplan calls this “Pessimistic Bias,” and argues that it affects the policies people  vote for. Despite the amazing economic gains of the past 100 years and even the past decade, most people are under the impression that things are just getting worse. But Prof. Caplan argues that even with all the tough problems in the world, there is reason for optimism; contrary to most people’s expectations, he contends that the best is yet to come.
Hat tip to Louis C.K.

Data Sources:
1) Rise in life expectancy since 1900
2) Rise in income since 1900
3) Decline in poverty since 1991
4) Increase in wealth since 1998
5) American income growth since 2001
Learn More:
1) Desert Island Game (game, beginner): Can you learn something about trade and cooperation by being marooned on a desert island?
2) Trade Ruler (game, advanced): As the Supreme Ruler of an island, you want the country to prosper. By engaging in international trade, you can achieve this goal.
3) The Great Fact (book review) Donald Boudreaux reviews Deirdre McCloskey exploration of the causes of the increase in humans’ standard of living
4) 200 Years, 200 Countries, 4 Minutes (video) Hans Rosling portrays the tremendous economic growth the world has seen in the last two hundred years in a dynamic visualization
5) Why Does 1% of History Have 99% of the Wealth? (video) Dierdre McCloskey goes over the incredible explosion in planetary wealth over the last 200 years
6) Two Cheers for Capitalism? (essay) Peter T. Leeson shows the tremendous success of global capitalism in bringing more education, higher life expectancy, more democracy, and greater income
7) Make Work, Not Progress | Econ Chronicles (video) Bryan Caplan goes over another economic fallacy, what he calls the “make-work bias”

Everything’s Amazing and Nobody’s Happy | Econ Chronicles
One of our most enduring mistakes is overestimating the economy’s troubles and underestimating the economy’s progress. Human beings dwell on problems, failures, and tragedies, and take solutions, successes, and triumphs for granted. I call this pessimistic bias. Recession, unemployment, bankruptcy, stagnation. We will never run out of complaints about the economy in a country of hundreds of millions and a world of billions.
Still, the big picture is amazingly sunny. Let’s start with the biggest picture of all: the world. Before the twentieth century, human beings were extremely poor. In 1900, the world had about 1.5 billion people, typically living less than fifty years. Famed economic historian Angus Madison estimated that the average citizen of Earth survived on under $1,000 a year. In 2012, we’ve got about seven billion people, typically living almost seventy years on about $8,000 a year.
It gets better. Money today buys stuff that would have astounded emperors and industrialists in 1900. Many of the goods we take for granted like planes, medicines, cell phones, and Internet weren’t available at any price. They simply didn’t exist.
The world economy has slowed during the last few years. But overall progress is still astounding. World income per person grew about 33 percent from 1998 to 2008, way faster than during the previous three decades.
The fraction of people on Earth who live in dire poverty has been cut in half, from about 40 percent in 1991 to about 20 percent in 2012. Sure, that’s 20 percent too many. But we’re well on our way to a future of plenty for all — a future human beings have always dreamed of but never seen.
All right. Forget recent decades of American progress. What about the United States economy right now? It’s true that it’s disappointing. Real income grew by a relatively grim 7 percent from 2001 to 2011.
But that’s not stagnation. That’s certainly not decline. And as usual we have some amazing new products that used to exist only in imagination. Before 2005, you couldn’t have watched this video on YouTube because there was no YouTube. Human beings have struggled to improve the world for centuries.
If these mighty efforts had only given us stagnation and decline, it would probably be time to give up in despair. But happily, that’s not the case.
Economic progress has been shockingly swift for over a century. The mighty efforts of billions of people to better their lives are paying off around the world. But there’s still plenty of room for improvement.
We have much to be grateful for. And there’s every reason to think that the best is yet to come.